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The United Arab Emirates - a dream destination for startups

The United Arab Emirates - a dream destination for startups

Friday 11, 09 2020
The United Arab Emirates has good factors that will help entrepreneurs thrive in a short period of time

In today's economy, small and medium enterprises are considered the center of all industries. Not only contributes to the general economy of the country but also has a significant meaning to the workers themselves. The number of employees deciding to split and become an organization after a short time working at the company is increasing significantly. Many statistics show that, at present, there are many countries with stable economies for workers to become entrepreneurs, such as Singapore, Thailand, Denmark, New Zealand, ... Among them, there is a country that has emerged as one of the most promising start-up environments - the United Arab Emirates (UAE)

The United Arab Emirates (UAE) is a federation of seven emirates at the southeast end of the Arabian Peninsula. The UAE was formally established on December 2, 1971, the capital is Abu Dhabi and the currency is the dirham United Arab Emirates (AED). The population of the UAE at the end of 2019 is 9,630,959 people. According to the International Monetary Fund, as of 2019, with a gross domestic product (GDP) of nearly $ 420 billion, the UAE economy is ranked second in the Middle East region, second only to Saudi Arabia and ranked 29th in the world. Furthermore, in 2019, UAE showed a sharp increase in its GDP through rising oil prices, hydrocarbon, and non-oil production levels. significantly higher mine. This shows that in the first and second quarters of 2020, the UAE's GDP will increase to nearly 2.9% and 4%. Moreover, the increase in oil production and oil prices in recent years has brought the UAE government a huge budget (approximately $60 billion). In 2019, the UAE government approved and decided to spend AED 60.3 billion (nearly $ 16.5 billion) to invest in health, education, and especially high quality of life of people. It can be seen that the UAE government is doing very well, with a population of nearly 10 million but the inflation rate and unemployment rate are very low (3% and 2.5%). Besides that, the UAE is also a very hard country in commodity import and export activities. In 2019 alone, the UAE spent nearly $ 230 billion on imports and earned nearly $ 310 billion in goods exports to countries like India or Iran.

 Influential Factors

It is clear that the UAE government's policy is one of the important factors in influencing high business operations in the UAE. The UAE ranked sixth in the government's policy affecting businesses, behind Austria, Switzerland, Germany, Luxembourg, and the Netherlands. First, UAE startups will receive special incentives and policies from the government. UAE’s report showed that 540 million AED (nearly $150 million) to recreate the startup ecosystem in Abu Dhabi. Accommodation support and health insurance are the two main factors that the UAE government wants to use. In addition, companies with fewer than five employees will receive 100% of benefits within two years, the benefit amount will be reduced by 50% for companies with 6 to 25 employees, and valid for three years. Next, the UAE government decided to give a minimum of 5% of its projects to entrepreneurs, up to AED 400 million (approximately $110 million).

This decision of the UAE government not only helps entrepreneurs make great strides in the beginning but also helps them expand their operations in the long run. Instead of having to wait three months to get paid, now entrepreneurs will get it once a month. The UAE government sees that shortening this time will help them pay attention to entrepreneurs more closely and reduce the business challenges facing businesses in the UAE. In addition to supporting businesses in the UAE financially, the UAE government has more paperwork policies. The UAE allows businesses with 100% foreign capital from May 2019, providing extended visas to entrepreneurs and partnering with Microsoft to create Hub 71 - a technology space to attract technology startups.
Influential Factors
In addition to government policy, labor market efficiency in the UAE is also one of the factors affecting entrepreneurial activities. The UAE has a diverse and very stable labor market. The labor force in the capital Abu Dhabi amounts to nearly 1 million 500 workers, of which about 130000 people (9.1% of the total UAE population) are indigenous, and nearly 1 million 400 are foreigners. Activities related to administration, defense, and social security are the main economic sectors, accounting for 24% of the total labor force. Construction, wholesale, and retail are the areas with the most foreign workforce. The UAE always has very attractive working conditions for foreign workers: higher wages and a very low unemployment rate, only approximately 3% in 2011.

Potential Factors

Infrastructure has been a major concern of the UAE, investing heavily in recent times and is gradually becoming one of the potential factors to support the activities of entrepreneurs in the future. From the road to the airport and telecommunications, the UAE has the best-developed infrastructure in the region which helps to support the economy in the long - term. The UAE's road network links transport hubs with key population centers in all seven of their emirate. Moreover, the UAE also links roads with its two neighbors, Oman and Saudi Arabia, to facilitate trade transactions. The aviation industry is one of the most important and leading sectors in the UAE, accounting for 28% of the UAE's GDP in 2019. The UAE has a total of 7 international airports and owns two major international airlines (Emirates and Etihad).  

The UAE government expects that by 2030, six of the UAE's seven airports will serve more than 300 million passengers each year. The railway is also showing its importance after the Dubai metro was officially put into operation in early September 2009, with the length of the track between the two lines is 75km long and costs up to $ 8 billion. The telecommunications industry in the UAE is growing strongly, contributing nearly 5% to the UAE's GDP. With the highest penetration rate in the world today (200%), the telecom industry is really helping entrepreneurs in entrepreneurial activities in the UAE. Moreover, UAE executives are backing investing more money to upgrade infrastructure amid oil prices are changing. 


The recommendations will focus on minimizing risks for entrepreneurs and maximizing the benefits of the above factors for multinational entrepreneurship in the UAE. 
Incentives should be used more by the government to create the dynamism of financial actors and to innovate opportunities, to calculate risks in commercial transactions. In addition, although the infrastructure and services in the UAE are still developing very well, the current cost is quite high, easily accessible to basic communication of businesses. Therefore, in addition to continuing to improve important infrastructure and new communication technology, the government has policies to cut down the cost of services appropriately to support the competitiveness of the entrepreneurs.
Overall, although the UAE is a society with a rapidly growing economy and challenges, the UAE is still one of the countries with the largest number of entrepreneurs in each world. Entrepreneurs can study the factors given above and consider choosing the UAE as a place to start their own careers.

Complied by Vietnam Credit


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